CONSUMERS have been warned of even more energy bill pain as plans have emerged to review the price cap four times a year instead of two.

The energy regulator Ofgem has said that the price cap on household energy bills could be reviewd every three months.

Ofgem now plans to insert two new reviews a year, one in January and another in July.

Ofgem says it would help pass on savings from a potential fall in gas prices to customers more rapidly and also protect under-pressure energy suppliers from being damaged by the cap.

But USwitch.com, the price comparison service, warned that it raises the possiblity of "a painful New Year hangover" saying the Ofgem measure has been unable to delay the pain of rising prices.

It comes just five days after UK ministers rejected calls led by the head of Glasgow-based energy firm ScottishPower to scrap the energy cap as part of measures to tackle the cost of living crisis.

The government has said it will continue to cap household energy bills even after 2023 when current legislation is set to run out.

It said that the cap is the best way of protecting millions of households across the country, despite recent record rises in energy bills that happened when the price cap was in place.

Scottish Power chief Keith Anderson wanted the cap replaced with a social tariff to ease the price hikes for those in fuel poverty, paid for by those who can afford to pay or through government support.

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Ofgem chief executive Jonathan Brearley has said that proposed changes to review the energy price cap four times a year would mean that bills could go up quicker, but they will also fall more rapidly.

Ofgem chief executive Jonathan Brearley said: “The proposed change would mean the price cap is more reflective of current market prices and any price falls would be delivered more quickly to consumers,” said Ofgem chief executive Jonathan Brearley.

“It would also help energy suppliers better predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures, which ultimately pushes up costs for consumers.

“The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.”

But Justina Miltienyte, head of policy at Uswitch.com said warned that it would mean another price cap change hot on the heels of October’s expected huge increase in rates.

"This could demand a swift revision to household budgets at one of the most expensive times of year, raising the possibility of a painful New Year hangover," she warned.

The price cap on energy bills was brought in by the energy regulator Ofgem in 2019 to protect British households from rip-off gas and electricity tariffs and it had the ability to extend annually until 2023. Next year the rules were set to expire.

And Ms Miltienyte added: "Until now, the price cap has at best acted as a delay mechanism for the pain of rising wholesale prices, but it is unable to prevent harsh increases hitting customers altogether. A quarterly review means that the ability of the cap to delay the pain of rising prices is shorter.

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"Conversely, if wholesale prices start falling, Ofgem would have the ability to pass these through to those on standard plans a little sooner.

"The price cap has always been a sticking plaster to deal with the problems of the energy market, and this proposed change is another attempted quick fix. The cap fails to give real, meaningful help to those who need it the most and this has been brought into extreme focus as costs have rocketed. More fundamental longer-term reform is still needed.”

Around 1.5m Scots households saw their energy bills soar by up to £693 a year in April after Ofgem hiked the price cap by the biggest increase yet.

It meant that the three in four customers on default tariffs paying by direct debit saw an increase of £693 from £1,277 to £1971 while the rest who are on prepayment meters - and tend to be among the most vulnerable - have seen a rise of £708 from £1,309 to £2017.

The sharp 54% rise, which will impact half the population, was said to be driven by a record rise in global gas prices, with wholesale prices quadrupling in the last year.

Early data predictions from consultants Cornwall Insight suggest that the cap could rise to £2,595 in October.

The Ofgem chief said said he understood the impact of increasing energy prices, but warned of further rises.

“I understand this is an incredibly difficult time for customers. I talk to customers almost every week and I know the price rises are having a huge impact on many people across the country.

“What we’re announcing today is a change to the price cap. We’re making the price cap update more frequently. So that means, yes, when prices go up, then the price cap will go up, but they will come down equally quickly when prices go down.

“The reason we’re doing that is we need this market to change to adapt to the changes we’re seeing in the international gas price.”

Mr Brearley added: “Throughout this gas crisis, we have been making sure that customers are protected and they pay a fair price for their energy.

“Now, if you look forward, and you think about the future of that gas price, it’s incredibly hard to predict. Clearly, since Russia invaded Ukraine, the international prices have gone up again.

“As I’ve said before, we do expect further price rises. But as soon as those costs come down, we will make sure that prices come down.”

After a consultation, Ofgem hopes that the changes could come into force from October, meaning the first change under the new system would be made in January.

The energy price cap – currently at a record £1,971 per year for the average household – is reviewed every six months and changed in October and April.

Ofgem considers a range of information when deciding where the price cap should be set. The price that energy suppliers pay for the gas and electricity they buy is a major part of this.

The regulator says that over the last year gas prices have risen so rapidly that suppliers were often forced to sell the gas for less than they bought it for due to the price cap.

By changing the price cap more often, Ofgem says it will make it more reflective of international gas prices, taking some of the pressure off suppliers.

The Ofgem chief said companies “artificially inflating” costs will be fined.

“We work very closely with customers so if the customer is struggling with their bills energy companies must help them with that, they must make sure they have access to support and advice.

“But equally, we have to make sure that costs are passed through because otherwise we don’t have the integrity we need in the market," he said.The proposed changes to the cap will also allow suppliers to recover some other costs in a better timescale.

The top priority is to protect consumers by ensuring a fair and resilient energy market that works for everyone,” Mr Brearley said.

“Our retail reforms will ensure that consumers are paying a fair price for their energy while ensuring resilience across the sector.”

The ScottishPower chief and other energy firm chief executives told MPs investigating energy prices last month that there needed to be “unprecedented” measures to prevent a fuel poverty crisis next winter.

Mr Anderson had said the effect on further predicted price rises in October will be “truly horrific” and that the size and scale of the problems was “beyond what I can deal with”.

He had called for the cap system - blamed for the failure of dozens of competitors as they were unable to pass on huge rises in raw energy costs - to be scrapped in favour of a social tariff that would see the better off pay more. He said a deficit fund should be established in the short term to allow people 10 years to pay off £1,000 on their bills.

But UK ministers have said they are sticking with the price cap.